ReedGroup Research Points to Over $6B in Avoidable Medical Costs

Ground-breaking research in the area of medical costs associated with
disability episodes points to dramatic cost savings for employers,
payers and providers

March 28, 2017 10:00 AM Eastern Daylight Time

WESTMINSTER, Colo.--(BUSINESS WIRE)--During a presentation at the Integrated Benefits Institute Annual Forum
in San Francisco today, ReedGroup is unveiling research findings from a
10-month study revealing that companies can save approximately $6
billion a year in “avoidable medical costs” associated with disability
claims among the 55 million U.S. workers with short-term disability
benefits. On a larger scale, these findings show that medical costs,
which contribute significantly to the overall cost of disability (along
with wages, benefits, and replacement labor), can be controlled.
Specifically, ReedGroup has found that significant medical costs can be
saved by returning employees to work within expected recovery time
frames.

The research involved analyzing how medical and pharmaceutical costs
change over time during the course of an individual’s absence from work.
The analysis was based on a longitudinal database of more than 885,000
disability claims and 41 million healthcare records from employers and
payers, associated with more than 1,400 unique diagnoses, over a 7-year
period. This comprehensive database allowed ReedGroup’s researchers to
build sophisticated models that considered important case
characteristics such as severity of disease and history of past illness.

“For years, employers and payers have been trying to determine how to
significantly lower costs associated with employees who leave work due
to short-term disability,” said Kevin Curry, National Practice Leader at
ReedGroup. “This is the first time we are revealing how active case
management and the usage of evidence-based medical guidelines can
shorten the duration of time employees are out of work, allowing
employers to more directly control expenses.”

ReedGroup’s research found that there was a direct link between incurred
costs and the duration of an employee’s disability, with significant
costs occurring even at later stages of the disability case. For
example, among the 13,000 cases in the research cohort that experienced
treatment for one of the highest-frequency disabilities in the work
force --meniscus disorders-- there were $10.4 million in medical and
pharmaceutical costs incurred after the point when the individuals could
be expected to return to work. Similarly, for the 1,200 cases who had a
carpal tunnel release surgery (another of the highest-frequency
disabilities), ReedGroup’s research showed that there were $957 in
excess costs per case that could have been avoided had employees
returned to activity within expected time frames.

Katie Zaidel, a Data Research Scientist at ReedGroup who led the
research project, explained, “While we confirmed our hypothesis that
most medical costs occur at the start of an individual’s disability, we
were encouraged to find that there are significant and measurable
expenses that can be saved throughout the disability episode. Even
shortening a person’s disability by a few days, through interventions
like active case management and adherence to evidence-based guidelines,
can represent significant savings in healthcare costs for employees,
employers, and payers.”

ReedGroup’s innovative research in the area of medical costs is
continuing, with new initiatives underway to study how the adherence to
treatment guidelines affects disability durations and medical costs, and
how employers can model costs for employees with chronic conditions such
as asthma and diabetes.

About ReedGroup

ReedGroup, a wholly owned subsidiary of The Guardian Life Insurance
Company of America®, is a leading health and productivity organization
providing services to over half of the Fortune 100 companies. With more
than 2000 employees, ReedGroup has operations across the United States,
Canada, and India. ReedGroup’s flagship product, MDGuidelines, is the
industry’s leading solution for total health management and workplace
productivity. MDGuidelines features the world’s most trusted disability
duration estimates and evidence-based Practice Guidelines from ACOEM.
MDGuidelines is a proven approach to managing and measuring the impact
of evidence-based care across entire populations.